BlackRock Chairman: "The Greatest Global Crisis of the 21st Century Is 'Retirement'"

Medical Advances and Aging Limit Pensions
"Americans Have Not a Single Dollar in Savings Accounts"

Larry Fink, chairman of BlackRock, the world's largest asset management firm, stated that the greatest global crisis of the 21st century will be 'retirement' and argued that a new social security system must be designed to address it.

In his annual letter to investors on the 26th (local time), Chairman Fink said, "The ability to retire in a financially sound manner is decreasing," adding, "Addressing this is one of the biggest economic challenges worldwide, including in the United States, by the mid-21st century."

BlackRock Chairman Larry Fink [Photo by Yonhap News]

He pointed out that the aging population is causing a decrease in the workforce while medical advancements are increasing life expectancy, placing enormous strain on the current social security system. Citing United Nations (UN) data, he said, "By the mid-21st century, people aged 65 and older will account for more than one-sixth of the global population," forecasting that several countries will reach the aging threshold within 20 years.

Chairman Fink highlighted that the bigger problem is that despite the imminent depletion of pensions due to this aging trend, very few Americans are preparing for retirement. He criticized, "According to 2022 U.S. Census Bureau data, nearly half of Americans aged 55 to 65 have not saved a single dollar in retirement accounts," and "Four out of ten Americans do not even have $400 in emergency savings, let alone retirement funds."

Fink emphasized, "I think it is somewhat crazy to consider 65 as our benchmark for the appropriate retirement age," urging governments and companies to regard those in their 60s and older not as retirees but as late-career workers, and to establish policies that provide incentives for those who wish to continue working. He also argued for the establishment of a new retirement system that covers not only full-time employees but also temporary and part-time workers. Furthermore, he suggested encouraging employer matching contributions to increase savings in '401(k)' (U.S. retirement plans) and reviewing the extension of pension receipt and retirement ages.

Finally, he stressed energy pragmatism. Fink said, "In my 50 years in finance, I have never seen such demand for energy infrastructure," adding, "Building massive infrastructure to respond to global digitalization and increased energy demand is a challenge of our time, as important as 'secure retirement.'"

Meanwhile, BlackRock plans to launch a retirement income solution product (LifePath Paycheck) targeting the U.S. retirement crisis next month. Fourteen financial planning partners will jointly participate, with the primary goal of providing lifelong income to 500,000 workers. On the day, BlackRock's stock closed at $820.20 on the New York Stock Exchange, up 0.49% from the previous session.